Big Oil's Spill Fleet May Lag Deep-Water Drilling by 3 Months
Spill Fleet May Lag Drilling by 3 Months
Kari Goodnough/Bloomberg
Boom is deployed in Perdido Bay, Alabama during the BP oil spill.
Boom is deployed in Perdido Bay, Alabama during the BP oil spill. Photographer: Kari Goodnough/Bloomberg
The biggest U.S. and European oil companies may not assemble a fleet of spill-response vessels that can handle a disaster like BP Plc’s Macondo blowout until March, three months after the deep-water drilling ban in the Gulf of Mexico is scheduled to expire.
Marine Well Containment Co., founded by Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and ConocoPhillips, will need as many as six months to create a temporary network of tankers, pipes and pressure-control devices for future offshore spills, said Margaret Ross, a spokeswoman for Irving, Texas- based Exxon. Building a fleet from scratch will take up to 18 months, Ross said today.
The delay may leave the Gulf and coastal beaches and fisheries vulnerable to another spill for months after the federal government allows deep-water oil exploration to resume, said Nick Berning, a spokesman for Friends of the Earth. Drilling in Gulf waters deeper than 500 feet (152 meters) was prohibited after the April 20 Macondo eruption that killed 11 rig workers and spewed enough crude to fill two supertankers.
“It’s alarming because obviously if drilling is going to be occurring you want to have the tools in place to respond to a spill,” Berning said in a telephone interview from the environmental group’s Washington headquarters. “The moratorium should not be lifted.”
Exxon, Shell, Chevron and ConocoPhillips in July announced plans to invest $250 million each to establish Marine Well, a non-profit company that will be able to halt spills of 100,000 barrels a day in seas as deep as 10,000 feet.
Macondo Blowout
Macondo, located 40 miles off the Louisiana coast in about 5,067 feet of water, gushed as much as 62,000 barrels a day according to government estimates. The well leaked for 87 days before a sealing cap was successfully installed. The U.S. Justice Department, Coast Guard, Interior Department and several House and Senate committees are investigating the catastrophe.
The disaster injured 17 workers, sank the $365 million Deepwater Horizon drilling rig and closed fishing across a section of the Gulf equal in surface area to the state of Nebraska. BP, based in London, announced the formation of a new safety division today and said exploration chief Andrew Inglis will leave the company by the end of the year.
The moratorium, which idled 33 rigs, is likely to end before it’s set to expire Nov. 30, William K. Reilly, co- chairman of President Barack Obama’s commission on the spill and offshore drilling, said in a Sept. 27 interview.
Exxon Briefings
Exxon, the lead sponsor of Marine Well, scheduled briefings for other offshore oil and natural-gas producers today and Oct. 14 in Houston to explain the containment system and ask them to join the group, Leslie Huselton, an outside spokeswoman for Marine Well, said in an e-mailed statement.
Lawmakers and Interior Secretary Kenneth Salazar criticized the oil industry in the aftermath of the disaster for being ill- prepared to deal with a spill of that magnitude.
The incident “laid bare shortcomings in offshore drilling safety, spill-response capabilities and blowout-containment practices,” Salazar said during a Sept. 22 panel discussion that included BP’s Inglis, Energy Secretary Steven Chu and Exxon Chief Executive Officer Rex Tillerson.
BP, the largest oil and gas producer in the U.S. Gulf, on Sept. 20 said it plans to join the Marine Well group and make available the equipment and some employees involved in bringing the Macondo well under control.
‘Already in Place’
Some of the BP equipment may need to be inspected and repaired after months of use in the Macondo effort, said Erik Milito, director of upstream and industry operations at the American Petroleum Institute, a Washington-based trade group for more than 400 oil and gas companies.
“We believe a lot is already in place” to respond to spills in the Gulf, said Milito, a former Interior Department lawyer. “Some of it may have to be refurbished and prepared for another blowout. We have seen some success from what BP deployed.”
The time it will take Marine Well to build its spill- response capability isn’t reason enough to prolong the moratorium, said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis.
“I don’t think it’s a legitimate reason to worry,” Youngberg said today in a telephone interview. “These companies have been operating in deep water for many, many years. Obviously, Macondo was a devastating accident but I don’t think any of us envision that happening again. It’ll take time for them to get this response mechanism in place.”
Meeting the Deadline
Ross, the Exxon spokeswoman, said BP’s contribution of equipment and personnel will help the group meet the six-month deadline.
“It demonstrates the commitment outlined in the containment system announced on July 21 that existing equipment will be secured and available within six months, with the new system targeted for completion within 18 months,” Ross said in an e-mailed statement.
Conceptual engineering for the spill-response system has been completed, according to a fact sheet published on Exxon’s website.
Once assembled, the fleet will be “maintained in a state of continuous operational readiness,” according to the sheet. “In the event of a future incident, mobilization to the field will start within days and the system will be fully operational within weeks.”
An illustration of the system shows vessels that would capture and store crude on the sea’s surface connected to underwater pipes, manifolds, pressure valves and other equipment used to separate oil and gas. Oil from a leaking well would be hauled away for sale, while gas would be burned off.
To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net.
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